Workers delaying retirement to keep health benefits

More and more workers are planning to work longer—purely so that they can keep their health benefits.

According to new research by the nonpartisan Employee Benefit Research Institute, more than half of employees say working longer is their plan so they can keep receiving employer-sponsored health insurance.

If health benefits were guaranteed upon retirement, 27 percent said they would retire earlier than planned—up from 15 percent in 2003, the study found.

Still, the report notes that delaying retirement may be wishful thinking. Only 19 percent of retirees say they were able to work longer to continue receiving health insurance through their jobs, the EBRI report says.

The report underscores the problem that many older workers and retirees face with health benefits. EBRI last fall reported that fewer employees are likely to get health benefits in retirement as employers drop or change the benefit. Additionally, health care costs comprise a significant chunk of seniors’ total spending: 9 percent for those adults aged 50 to 64, 12 percent for those 65-74, and 15 percent for those 75-84.

Paul Fronstin, director of EBRI’s Health Research and Education program and author of the report, says the Patient Protection and Affordable Care Act might change the current labor-market dynamics of older workers.

Retirees may stand to benefit from exchanges, where they can purchase health insurance, as well as other insurance-market reforms including guaranteed issue, modified community rating, and premium and costsharing subsidies for those under 400 percent of poverty, as well as increased health plan choices, Fronstin says.

“With those expanded alternatives, employers that currently provide retiree health benefits may well find themselves considering an exit strategy,” Fronstin says. “That, in turn, may affect the willingness of many older workers to stay on the job.”